Capitol Notebook: The Legislature's fiscal fix is in flux

Posted: Sunday, March 17, 2002

The "municipal dividend" appears to be a certain component in whatever the House might produce this year in the way of a long-range fiscal plan.

The concept, advanced for years by Unalaska Democratic Rep. Carl Moses, will get another look from the House Finance Committee Wednesday.

It could become the most high-profile use ever of permanent fund earnings for government operations, although Senate passage isn't a given, by any means.

The bill, which has been going through some redrafting, would take $100 per Alaskan from the earnings of the fund, or about $59 million. In some fashion, it would be directed at local government operations.

Simultaneously, the state no longer would spend general fund dollars on revenue sharing and other municipal assistance, which currently totals about $51 million.

The municipal dividend would have no impact on the individual dividends of residents for several years, and then would amount to only about $20 less per check, according to an analysis.

At the same time, it would give municipalities a source of funding that isn't in direct competition with other state needs.

The $8 million increase in appropriations for local government services is "a very significant bump," said Kevin Ritchie, executive director of the Alaska Municipal League.

The next question is whether Moses' bill can be amended to include other uses of permanent fund earnings.

Rep. Eric Croft, an Anchorage Democrat, is interested in using the bill as a "vehicle" for the percentage-of-market-value payout plan endorsed by the bipartisan Fiscal Policy Caucus. That would make hundreds of millions of dollars available annually for state government operations.

Croft said the amendment would have to be crafted carefully to avoid running afoul of the constitutional limitation of one subject per bill. But he said it can be done.

The moment of truth is approaching for the Fiscal Policy Caucus, as it approaches its first birthday.

As the House Finance Committee started amending the 2003 budget bill Friday afternoon, it wasn't clear if fiscal caucus members, who comprise more than half of the 40-member House and seem to have potentially six of 11 votes on the committee, ever intend to press their numerical advantage.

Less than half of the 28-member Republican-led majority belongs to the fiscal caucus, which means that there are tough procedural hurdles to getting revenue measures to the House floor.

Republican Reps. Andrew Halcro of Anchorage and Peggy Wilson of Wrangell have said that some of their fiscal caucus colleagues might be wilting under pressure from House leadership.

Already, leadership has won the battle on dealing with the budget before a long-range fiscal plan.

Fiscal caucus members prepared an amendment Friday to reverse that: It would have made the budget contingent upon enacting taxes of at least $410 million, the municipal dividend and the POMV payout (at an unspecified percentage).

But after closed-door meetings of Republicans Friday afternoon, that plan fell apart. Republicans Bill Hudson of Juneau, Jim Whitaker of Fairbanks and Ken Lancaster of Soldotna had their names crossed out on the amendment, which Hudson and Lancaster admitted was embarrassing. Only the three Democrats on the Finance Committee voted for it.

But the committee offered some hope that new revenue will be taken up. Members finally agreed on a statement of intent to be included in the budget that no more than $600 million in reserves would be used to balance the budget, with an additional $400 million that's needed to fill a budget gap coming from new revenues. Hudson said he accepts a promise from Co-Chairman Eldon Mulder of Anchorage that the committee will act "expeditiously" on new revenue in the coming week.

So it may be just a few days before we find out how much clout the fiscal caucus has or is willing to use.

For the past 12 months, there has been at least the illusion of momentum toward a long-range fiscal plan.

But an anti-climax seems possible. It may be that the caucus landed on the beach at Normandy but surrendered its weapons.

Bill McAllister can be reached at

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